Grain Markets Trade Quietly Lower

The grain markets continue to trade quietly lower as the 2017 year comes to and end.  Fundamentally there hasnot much for corn to stand on its own with weekly export inspections continuing to be lower than needed.  Export inspections YTD at 362 mln bu are now 40% behind last year when USDA is forecasting it to be down 16%.   The USDA will most likely lower the export number in the January supply and demand report. 

Path of least resistance in corn remains to grind lower as the funds defend their short position of over 210k contracts heading into the year end. Ethanol margins in the US continue to struggle in the red with plants expected to start slowing grind down, especially as we turn the calendar to 2018 if margins stay in the red.

Good rains in Argentina over the weekend and more forecast for this week kept the pressure on the complex. While the weather maps continue to see warmer/drier trend in the extended 10 day and beyond, traders note the dry areas will be a lot smaller by the end of the week. Soybean planting in Argentina nationally is 62% complete vs 72% on average.

Weekly export inspections on soybeans this week were better than expected but the trade remains focused on the fact YTD inspections are down 13% from last year’s pace when the USDA is calling for a 2.3% increase over year ago. To hit this number we would need to avg 33.3 mln bu each week for the rest of the year vs the 28 mln bu avg last year for that period.

In regards to wheat the market will be watching the weather closely as the HRW areas have been dry.  This will cause the wheat to be more susceptible to winter kill during cold snaps.  Parts of Kansas have seen 25% of normal moisture over the past 60 days.

While most of this news isn’t bullish there will most likely be opportunities to sell grain at levels higher than today as we have the whole growing season ahead.  Be ready with offers to sell grain if the market does move up.  Patience is the key for right now but being more aggressive on sales than usual will be warranted when opportunities arise.

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